Cheques blamed for late payments

The widespread use of cheques as a primary means of payment by companies is one of the main barriers to eradicating Ireland’s late payment culture, a Central Bank study indicates.

The research has found that Ireland remains one of a small number of EU member states to still use cheques for regular payment purposes. Furthermore, Ireland ranks second only to France in terms of intensive cheque use.

According to the Central Bank, the main users of cheques here are businesses, despite the fact that companies in most other EU countries no longer use this method of payment.

While consumers account for just over a third of all cheques issued here, businesses issue nearly half (44%) of all cheques in Ireland.

In 2011, that equated to a total of 37m cheques. During the same year, consumers issued nearly 30m cheques.

“Although the level of usage has fallen in recent years, our survey shows that business still accounts for a significant portion of cheques,” said Ronnie O’Toole, programme manager of the National Payments Programme at the Central Bank.

The survey also shows that over half of consumer cheques issued are payable to businesses, and mostly to SMEs.

The ECB has previously estimated that the average cheque costs around €3.55 when all costs are included and that, for an small or medium enterprise, the cost will include 50c stamp duty on each cheque, as well as additional bank and postal charges.

Mr O’Toole said there is “a strong case” for Irish businesses to review their payment methods.

“There is strong evidence that cheque usage is a significant contributor to Ireland’s late payment culture,” he said. “Unless we move from the ‘cheque in the post’ culture, the problem of late payments will remain.”